COMMERCIAL LEASES AND RENTAL AGREEMENTS

SEA-MC tit. 6, subtit. III, ch. 6.104

in effect

Seattle Mun. Code § 6.104.010 Scope

6.104.010 - Scope This Chapter 6.104 applies to all lessors of commercial property located within Seattle city limits. This Chapter 6.104 is an exercise of the City's police power to regulate commercial contracts. (Ord. 126982, § 2, 2023)

Seattle Mun. Code § 6.104.020 Definitions

6.104.020 - Definitions For the purposes of this Chapter 6.104: "Base rent" means the agreed-upon cost that a commercial tenant regularly pays to a lessor for the right to possess and use a property. "Commercial property" means real estate that is intended to generate a profit and is used for: commercial or retail activities other than (a) rental as residence or for lodging; as office space; as research and development laboratory space; or as a medical practice, clinic, or dispensary; and (b) farming or cultivation. "Commercial lease" means a lease that has commercial property as its subject. "Department" means the Department of Finance and Administrative Services, or successor entity. "Director" means the Director of Finance and Administrative Services, or successor entity, or the Director's designee. "Lease" means any agreement between a lessor and a tenant that establishes or modifies the terms, conditions, rules, regulations, or any other provisions concerning the use and occupancy of a commercial property. "Lessor" means the owner, or agent of the owner, of a commercial property that is leased to a business entity or person, called the tenant. For the purposes of this Chapter 6.104, "lessor" does not include: 1. The United States government; 2. The government of any Indigenous Tribe; 3. The State of Washington, including any office, department, agency, authority, institution, society, or other body of the state, including the legislature and the judiciary; or 4. Any county or local government. "Letter of credit" means any guarantee from a bank or other institution to pay rent or other financial obligations associated with the assumption of a commercial lease if the tenant fails to pay, and which is secured either by the bank or other institution holding the amount of assets so guaranteed for the duration of the instrument or by the issuance of a line of credit. Letters of credit may be issued by a bank or other institution on behalf of an individual, who is usually but not always the business owner, or a business. "Personal guaranty" means a specific and time-limited contractual agreement either as an element of a commercial lease or rental agreement or as a separate, freestanding agreement which establishes an individual's agreement to pay, with their own money, certain expenses that a commercial tenant owes the lessor under the terms of the lease if the tenant is unable to pay. These expenses typically include base rent and tenant improvement costs and may include taxes, insurance, common area maintenance, and utility charges, and they may include additional expenses. "Security deposit" means a payment other than base rent or additional rent that a tenant makes to a lessor prior to the commencement of the lease term, which the lessor retains as a security for the duration of the lease term for performance of the tenant's obligations under their lease agreement and/or to fund the cost of addressing any property damages incurred by the tenant during the lease term. This payment may be made by an individual, who is usually but not always the business owner, or a business. "Tenant" means a business entity or person who is entitled to occupy or possess commercial real estate that belongs to another business entity or person, in accordance with the terms of a lease agreement. "Tenant improvement allowance" means a pre-negotiated sum of money that a lessor may optionally make available to a commercial tenant to support the making of tenant improvements to a leased space. "Tenant improvement costs borne by the tenant" means costs that support the making of improvements to a leased space that are borne by that space's tenant rather than by its lessor. If a tenant improvement allowance is insufficient to fund the full configuration needs of a tenant, the incremental costs of the configuration are considered tenant improvement costs borne by the tenant. "Tenant improvements" means customized alterations to a leased commercial space as mutually agreed to as a condition or an element of a lease agreement, in order to configure the space for the needs of that particular tenant, which may include changes to walls, floors, ceilings, and lighting, among other construction and design elements. Tenant improvements are exclusive of the following lessor-provided items and features of a leased commercial space: heating, ventilation, and air conditioning units and ductwork; exhaust fans, hoods, and fireproofed ductwork approved by a fire marshal to allow for commercial kitchen exhaust; sprinkler and fire alarm/fire suppression systems, electrical panels and main electrical line connections, main plumbing and sewage line connections, bathrooms, and any other base building systems that are necessary to support commercial business or retail activity. (Ord. 126982, § 2, 2023)

Seattle Mun. Code § 6.104.030 General Provisions

6.104.030 - General Provisions All lessors of commercial premises involved in promoting or executing lease agreements for commercial properties within Seattle shall comply with the following: A. For any new lease executed after January 29, 2024, the total value of any required security deposit and/or letters of credit shall not exceed the total value of the first month and last month of base rent. B. For any new lease executed after January 29, 2024, the maximum personal guaranty that may be included in a commercial lease or in a separate agreement upon which a commercial lease is conditioned is the sum of (1) the first two years of base rent payments and (2) the total cost of tenant improvements made to the leased space, inclusive of tenant improvement allowance, if any; and exclusive of tenant improvement costs borne by the tenant, if any. (Ord. 126982, § 2, 2023)

Seattle Mun. Code § 6.104.040 Summary of provisions in commercial leases that limit personal guaranties and the value of security deposits and/or letters of credit

6.104.040 - Summary of provisions in commercial leases that limit personal guaranties and the value of security deposits and/or letters of credit A. The Director shall, as soon as is practicable, and as the Director shall deem necessary from time to time, prepare a summary of this Chapter 6.104 and any other applicable regulations that pertain to commercial leases. B. The Department shall make the summary described in subsection 6.104.040.A available to lessors and to commercial tenants at no cost. C. Nothing in the summary described in subsection 6.104.040.A shall be construed as binding on or affecting any judicial determination of the rights and responsibilities of landlords and tenants, nor is the Department liable for any misstatement or misinterpretation of the applicable laws. (Ord. 126982, § 2, 2023)

Seattle Mun. Code § 6.104.050 Distribution of summary by lessor required

6.104.050 - Distribution of summary by lessor required A. A copy of the summary described in subsection 6.104.040.A shall be provided by the lessor of commercial property to any commercial tenant or prospective commercial tenant when such new property lease is offered. B. Lessors shall, within 90 days after the Director prepares the summary described in subsection 6.104.040.A, distribute the summary to their existing commercial tenants. (Ord. 126982, § 2, 2023)

Seattle Mun. Code § 6.104.060 Enforcement and rulemaking powers and duties

6.104.060 - Enforcement and rulemaking powers and duties A. The Director shall adopt rules pursuant to Chapter 3.02 to implement the provisions of this Chapter 6.104. The Director may promulgate, revise, or rescind rules deemed necessary, appropriate, or convenient to administer the provisions of this Chapter 6.104, providing affected entities with due process of law and in conformity with the intent and purpose of this Chapter 6.104. B. The Director is authorized to investigate any potential violation of this Chapter 6.104. C. Any violations of this Chapter 6.104 shall be enforced under the citation provisions set forth in Section 6.104.080. (Ord. 126982, § 2, 2023)

Seattle Mun. Code § 6.104.070 Violations

6.104.070 - Violations It is a violation of this Chapter 6.104 for any commercial lessor to: A. Enter into, or require another party to enter into, any commercial lease in which the total value of any required security deposit and/or letters of credit exceeds the total value of the first month and last month of base rent. B. Enter into, or require another party to enter into, any commercial lease agreement that includes or is conditional upon personal guaranty that exceeds the sum of: (1) the first two years of base rent payments; and (2) the total cost of tenant improvements made to the leased space, inclusive of tenant improvement allowance, if any; and exclusive of tenant improvement costs borne by the tenant, if any. (Ord. 126982, § 2, 2023)

Seattle Mun. Code § 6.104.080 Citation

6.104.080 - Citation A. If, after investigation, the Director determines that a lessor has committed a violation of this Chapter 6.104, the Director may issue a citation to the person responsible for the violation. The citation shall include the following information: 1. The name and address of the responsible person to whom the citation is issued; 2. The complete address of the commercial property subject to the commercial lease violation; 3. A separate statement of each violation; 4. The date of the violation; 5. A statement that the person cited must respond to the citation within 15 business days after the date of service; 6. A space for entry of the applicable penalty; 7. A statement that the response must be sent to the Hearing Examiner and received not later than 5 p.m. on the day the response is due; 8. The name, address, and phone number of the Hearing Examiner where the citation is to filed; 9. A statement that the citation represents a determination that a violation has been committed by the responsible person named in the citation and that the determination shall be final unless contested as provided in subsection 6.104.080.C; and 10. A certified statement of the inspector issuing the citation, authorized by RCW 5.50.050, setting forth facts supporting issuance of the citation. B. The citation may be served in person or sent by first class mail, addressed to the last known address of such person(s). Service shall be complete at the time of personal service, or, if mailed, three days after the date of mailing. If a citation sent by first class mail is returned as undeliverable, service may be made by posting the citation at a conspicuous place on the property. C. Response to citations 1. A citation must be responded to in one of the following ways: a. Payment of the monetary penalty specified in the citation, in which case the record shall show a finding that the person committed the violation; or b. A written request for a mitigation hearing to explain the circumstances surrounding the commission of the violation and providing an address to which notice of such hearing may be sent; or c. A written request for a contested hearing specifying the reasons(s) why the cited violation did not occur or why the person cited is not responsible for the violation, and providing an address to which notice of such hearing may be sent. 2. A response to a citation must be received by the Office of the Hearing Examiner no later than 15 business days after the date the citation is served. D. If the Office of the Hearing Examiner does not receive a response within 15 business days of service of the citation, the Hearing Examiner shall enter an order finding that the person cited committed the violation stated in the citation, and assessing the penalty specified in the citation. E. Hearings 1. Mitigation hearings a. If a mitigation hearing is requested, the mitigation hearing shall be held within 30 days after written response to the citation requesting such hearing is requested by the Hearing Examiner. Notice of the time, place, and date of the hearing shall be sent to the address specified in the request for hearing not less than ten days prior to the start of the hearing. b. The Hearing Examiner shall hold an informal hearing that shall not be governed by the Rules of Evidence. The person cited may present witnesses, but witnesses may not be compelled to attend. A representative of the Department may also be present and may present additional information, but attendance by a representative of the Department is not required. c. The Hearing Examiner shall determine whether the cited person's explanation justifies reduction of the monetary penalty; however, the monetary penalty may not be reduced unless the Department affirms or certifies that the violation has been corrected prior to the mitigation hearing. Factors that may be considered in whether to reduce the penalty include whether the violation was caused by the act, neglect, or abuse of another; or whether correction of the violation was commenced promptly prior to citation but that full compliance was prevented by a condition or circumstance beyond the control of the person cited. 2. Contested hearing a. If a person requests a contested hearing, the hearing shall be held within 60 days after the written response to the citation requesting such hearing is received. b. Contested hearings shall be conducted pursuant to the procedures for hearing contested cases contained in Section 3.02.090 the rules adopted by the Hearing Examiner for hearing contested cases, except as modified by this subsection 6.104.080.E.2 The issues heard at the hearing shall be limited to those that were raised in writing in response to the citation and that are within the jurisdiction of the Hearing Examiner. The Hearing Examiner may issue subpoenas for the attendance of witnesses and the production of documents. c. No citation shall be deemed insufficient for failure to contain a detailed statement of facts constituting the specific violation which the person cited is alleged to have committed or by reason of defects or imperfections, provided such lack of detail or defects or imperfections do not prejudice substantial rights of the person cited. d. A citation may be amended prior to the conclusion of the hearing to conform to the evidence presented if substantial rights of the person cited are not thereby prejudiced. e. The certified statement or declaration authorized by RCW 5.50.050 shall be prima facie evidence that a violation occurred and that the person cited is responsible. The certified statement or declaration authorized under RCW 5.50.050 and any other evidence accompanying the report shall be admissible without further evidentiary foundation. The person cited may rebut the Department's evidence and establish that the cited violation(s) did not occur or that the person contesting the citation is not responsible for the violation. f. If the citation is sustained at the hearing, the Hearing Examiner shall enter an order finding that the person cited committed the violation. If the violation remains uncorrected, the Hearing Examiner shall impose the applicable penalty. The Hearing Examiner may reduce the monetary penalty in accordance with the mitigation provision in subsection 6.104.080.E.1 if the violation has been corrected. If the Hearing Examiner determines that the violation did not occur, the Hearing Examiner shall enter an order dismissing the citation. g. The Hearing Examiner's decision is the final decision of the City. 3. Failure to appear for a requested hearing will result in an order being entered finding that the person cited committed the violation stated in the citation and assessing the penalty specified in the citation. For good cause shown and upon terms the Hearing Examiner deems just, the Hearing Examiner may set aside an order entered upon a failure to appear. F. Citation penalties 1. The following penalties shall be assessed for any violations of this Chapter 6.104: a. $500 for the first violation; and b. $1000 for each subsequent violation within a five-year period. 2. The Director may, in an exercise of discretion, issue a warning to the person responsible for the violation if that person has not been previously warned or cited for violating this Chapter 6.104. 3. Each party responsible for a violation can be assessed a separate penalty for that violation. 4. If the person cited fails to pay a penalty imposed pursuant to this Section 6.104.080, the penalty may be referred to a collection agency. The cost to the City for the collection services will be assessed as costs, at the rate agreed to between the City and the collection agency, and added to the penalty. Alternatively, the City may pursue collection in any other manner allowed by law. 5. Each day a person commits a violation under Section 6.104.070 may be considered a separate violation for which a civil citation may be issued. (Ord. 126982, § 2, 2023)

Seattle Mun. Code § 6.104.090 Private right of action

6.104.090 - Private right of action A. Any person that suffers financial injury as a result of a violation of this Chapter 6.104 may bring a civil action in a court of competent jurisdiction against the lessor violating this Chapter 6.104 and, upon prevailing, may be awarded reasonable attorney costs and such legal or equitable relief as may be appropriate to remedy the violation including, without limitation, any payments made to the lessor by the tenant plus interest due. Interest shall accrue from the date that the payment or payments were made at a rate of 12 percent per annum, or the maximum rate permitted under RCW 19.52.020. To the extent that actual damages are unliquidated or difficult to prove, a court may award liquidated damages of up to $20,000 instead of actual damages. Such damages when awarded are to be on a per incident, rather than a per tenant basis. B. For purposes of this Section 6.104.090, "person" includes any entity a member of which has suffered injury, or any other individual or entity acting on behalf of an aggrieved party that has suffered injury. (Ord. 126982, § 2, 2023)

Source: City of Seattle, Seattle Municipal Code and City Charter (Municode Library, library.municode.com)URL: https://library.municode.com/wa/seattle/codes/municipal_code?nodeId=TIT6BURE_SUBTITLE_IIIMIBURE_CH6.104COLEREAGFetched: 11/1/2026